O’Melveny Worldwide

The Wall Street Journal: FTX’s Fight With Bahamas Puts Customers’ Crypto in Limbo

November 19, 2022

FTX’s new management and regulators in the Bahamas are in a dispute over control of the cryptocurrency exchange’s billions in assets following its sudden bankruptcy. John Ray, the new chief executive of FTX, placed the company and more than 100 affiliates under Chapter 11 protection in Delaware last week, except for FTX Digital Markets, which was taken over by authorities in the Bahamas. According to liquidators, FTX Digital Markets, which was ruled insolvent by the Securities Commission of the Bahamas, “managed and operated” numerous FTX companies owned by founder Sam Bankman-Fried. The timeline for customers recovering their money will depend on whether the dispute ends in a Delaware bankruptcy court or through a liquidation in the Bahamas.  “Conflict never helps creditors or other stakeholders maximize their recoveries,” said Evan Jones, a restructuring partner at O’Melveny & Myers LLP. “It’s clear that there has thus far not been coordination between the relevant authorities.”

The Wall Street Journal subscribers can read the full article here.